Nordic nations loan €300m to Iceland

ICELAND’S central bank yesterday said it had received a loan tranche worth €300m(£267m) from Nordic countries, part of the country’s loan programme with the International Monetary Fund (IMF).

The bank said in an emailed statement that Iceland had actually been authorised to draw up to €444m by early January, but that €144m was to be carried over to next year as the whole amount was not considered necessary. “The disbursed amount will be invested as a portion of the Central Bank of Iceland foreign exchange reserves,” it added.

The foreign reserves now amounted to 458bn Iceland crowns, or €2.5bn, which it said was more than a year’s imports of goods at levels of the past 12 months.

The second review of the IMF programme is due to take place in the middle of January, the bank added. It said that nearly €2.3bn in loan facilities negotiated with the Nordic countries, the International Monetary Fund, and Poland have yet to be drawn.

Iceland negotiated a $10bn bailout package after it was brought low by the failure of its top three banks in the global financial crisis. The economy contracted by 7.2 per cent in the third quarter year-on-year.

Earlier this month the Serious Fraud Office launched a criminal investigation into failed Icelandic bank Kaupthing to explore what happened when the bank collapsed.